The growth of activity
According to the information BIS activity on the currency market has sharply increased. If the daily volume of operations in 2004 made approximately 1,2 billion dollars in 2007 its number has increased to 3,2 billion dollars. I.e. practically increased on unprecedented 69 %!
This increase much more exceeds the growth of 2001-2004. And this prompt growth is defined by different segments of the market in various proportions. The strongest changes have occurred in the segment of OTC derivatives which has grown almost on 80 % proximately. It is necessary to point out the prompt growth of retail sector and CFD contracts on a lot of financial instruments.
The reasons of the prompt growth
First of all, due to the offer of a plenty of financial instruments, numerous investors have paid the attention to the currency market. High volatility tools of the currency market let small and medium investors realize the investment purposes in short terms.
The financial instruments of the currency market give investors such opportunities as:
- simplicity and opportunity to test of the virtual accounts of on-line trading platforms own investments ideas;
- the modern trading platforms having the friendly interface and the most powerful tools of technical analysis;
- opportunity to develop, check up and debug the trading strategy which allows the investors to avoid classical mistakes of invest in the financial markets;
- to begin the investment activity, with the reasonable size of assets using the opportunities of margin trading;
- to define by itself a suitable level of risk and accordingly a level of profitableness on the chosen financial instrument;
- to receive profits, under condition of the market strategy and correct management of assets, without dependence from a situation on the markets in general, i.e. both in days of growth of the markets and in days of their falling!
Investment strategies
The investment strategy on the currency market, certainly, is defined by the investors, but nevertheless we would like to offer some strategy, it allows avoiding the most widespread mistakes and accordingly unnecessary losses.
Our ideology in development of strategy of investment sounds as " the Investor without losses is the profitable investor ", i.e. the main task of any strategy is to avoid substantial risks! In conformity with statistics investors often have the greatest losses at attempt to make the transactions on a phase of correction.
The Following on the Trend – This all known strategy demands significant explanations and the comments as this strategy is fair and makes a profit only at certain conditions of the state of the market. In brief it can be formulated as follows:
- the strategy is effective only on a moving phase of a full cycle;
- it is necessary to carry out the input in the market only in the beginning of the third wave;
- the fixing of the profit in the end of the third wave, neither at a presence of acceleration of the trend or in the end of the fifth wave in the moment a contact with a line of the channel in view of divergence between the tops of the 3-rd and the 5-th waves;
- it should pay special attention to the lines of resistance and supports calculated on the levels of Fibonacci, especially at set Stop-loss of warrants;
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The swing Trading – this technology demands serious preparation of the investor as it mentions in its realization a phase of correction which is most not predicted and demands of rather extensive knowledge in the field of the technical analysis. The most important points of this strategy are following:
- the choice of the timeframe for the chosen financial instrument;
- the exact allocation of cycles and phases on the schedule of the financial instrument;
- the debugged trading system for definition of the moments of an input/output in/from the market.
The position trading – is the most effective strategy as it levels mistakes of the analysis and carrying out of transactions, but it demands of the large starting capital and serious knowledge in the field of the fundamental analysis and the global technical analysis. The most important point is the understanding of a phase of development of the world economy and status of leading state economy; the calculation of duration of the open position in view of the forecast and opportunities of hedging and/or arbitration on corresponding derivates.
Resume
The investment in the financial instruments of the currency market for small and medium investors should be justified by the reasonable size of the invested assets, by the debugged strategy on the basis of the chosen trading platform and, certainly, knowledge and experience of the investor - the financial market does not forgive mistakes.
It is difficult, demanding of the wide knowledge and persistence on achievement of objects in view, but interesting and very profitable business.
Source: http://www.ArticlePros.com/author.php?James Carter
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